News of possible COVID vaccine shot in the arm for Wall Street
Wall Street roared back into positive territory Monday as investors welcomed positive news about a possible COVID-19 vaccine and oil prices bounced back.
The Dow Jones Industrial Average jumped 3.9 per cent, while the S&P 500 erased last week's losses in a single session with a gain of 3.2 per cent.
The S&P 500's energy, real estate, industrials, materials and financials sectors all rose at least 4 per cent . The energy group climbed 7.6 per cent, driven by an 8 per cent jump in oil prices.
The gains followed a global rally amid optimism about a potential vaccine for the coronavirus and hopes for a US economic recovery in the second half of the year.
It sets up the Australian sharemarket for a strong open, with futures early today AEST pointing to a gain of 106 points, or 1.9 per cent, at the open.
Stocks were already headed for a higher opening on Wall Street when a drug company announced encouraging results in very early testing of an experimental coronavirus vaccine.
The stock of the company, Massachusetts-based Moderna, jumped 25.6 per cent.
"The question of how quickly people come back, or will they come back to the way they used to do things, that's much different if you have a vaccine," said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.
Investors were also encouraged by remarks over the weekend from Federal Reserve Chair Jerome Powell, who expressed optimism that the US economy could begin to recover in the second half of the year.
Once the outbreak has been contained, he said, the economy should be able to rebound "substantially."
Investors are encouraged that, so far at least, there hasn't been a lot of data implying the reopening of the economy is going to lead to a resurgence in the number of COVID-19 cases, said Sam Stovall, chief investment strategist at CFRA.
"Of course, because we are responding to impressions, we could end up giving back some of these gains should additional information contest our beliefs," he said.
Wall Street is hoping that the reopening of businesses and the relaxation of stay-at-home mandates continue without any major setbacks, paving the way for corporate profits to bounce back.
Europe has been taking steps to reopen its economy more widely, and so far, new infections and deaths have slowed considerably across the continent.
European indexes also climbed, with the pan-continental Stoxx Europe 600 gauge rising 3.4 per cent. Most major Asian benchmarks ended the day higher.
Moderna said it had positive results from early human tests of its vaccine.
"The idea that there has been progress in Moderna's trials but also the more positive news that it looks like coronavirus could be tackled with a vaccine, has helped boost sentiment," said Edward Park, deputy chief investment officer at Brooks Macdonald.
Originally published as News of possible COVID vaccine shot in the arm for Wall Street